Student Loan Repayment & College Savings Plans for Recruitment & Retention

1. Student Loan Repayment & College Savings Plans for Recruitment & Retention Presented by Renee Kelly

2. THE CHANGING ENVIRONMENT • Current Job Market • Low Unemployment • historic low of 4.1% 1 • Global Marketplace • Job Skill Specialization • Competition in the Marketplace • Wave of new benefits • Cultural Change • Diminished Loyalty Factor – What was 1 to 2 jobs during career, now 10 to 15. • 60% of employees are open to new job opportunities.2

3. THE CHANGING ENVIRONMENT Generational Shift Millennials Age Range of 20 – 37 Years

4. THE CHANGING ENVIRONMENT Increasing Cost of Education

5. THE CHANGING ENVIRONMENT Affects of Increased Cost of Education Student debt continues on after job employment: Mega Loans (those over $50K) can last a lifetime Parents are becoming involved with their children’s student loan debt. 68% of adults over 60 have borrowed to help cover children's Tuition costs Why? Because students are maxing out on loans due to increasing cost of tuition. This number has QUADRUPLED Since 2005

6. THE CHANGING ENVIRONMENT Increasing Cost of Education – By the Numbers (tuition IO pres) 1.4T Auto Loans 1.2T Credit Card Debt 1.02T

7. THE CHANGING ENVIRONMENT Foregoing Life Decisions Marriage Per US bureau, home ownership has fallen every year for the past six years. 70% of prospective first time home buyers are putting off purchases because of student loans debt – and lacking credit scores and savings needed for mortgage approval. Starting Small Businesses risk averse due to outstanding loans 35% of millennials not saving for retirement because of education obligations (this means employers are not contributing their employer match). Stop and think of impact to society if millennials age without retirement savings. And guess where they are going? They are moving back in with Mom and Dad!

8. THE CHANGING ENVIRONMENT • Attracting, Retaining and Engaging Employees: • What Employees Want • 79% of employees state they would prefer new or additional benefits to a pay increase. (tuition Io ppt) • Younger EEs not wooed by traditional benefits • More Self Aware - Foregoing Life Decisions, have ability to focus on ‘me’ • Flexibility in the Workplace • Growth and Learning Opportunities • Wellness Programs – Mental, Physical and Financial • Recognition • Open Communication – Want to be listened to and their concerns addressed. If not, they leave. • Want regular feedback instead of traditional performance reviews. Want to share their concerns with senior leadership. • Corporate Responsibility – 79% of employees want to work for a socially responsible employer. Price Waterhouse Coopers found that employees who are committed to their employers give 57% more effort to their work and 87% were less likely to resign.

9. THE CHANGING ENVIRONMENT • Cost to Replace Employees • Gallup estimates that millennial turnover costs US economy $3.5 B annually. 2 • Cost to Onboard New Employee • UC Berkeley Institute for Research on Labor and Employees reports that on average employers spend $4000 to hire a new employee. Can also be broken down by position level and percentage of job’s salary: • ADVERTISING and INTERVIEWING • TRAINING • LOST ENGAGEMENT for co-worker training • PRODUCTIVITY – 3 years to max level

10. Employers Challenges with the New Employee Environment

11. EMPLOYERS CHALLENGES WITH THE NEW EMPLOYEE ENVIRONMENT

12. A NEW BENEFIT EMERGES Student Loan Repayment Programs - Overview Employer has flexibility to design the plan how they want. Customize (and discriminate) based on their employees needs. Employee still makes their minimum monthly payment. Repayment programs are to reduce the principal, not the payment. COSTSSet Up & Administrative Fees Contribution

13. A NEW BENEFIT EMERGES • STUDENT LOAN REPAYMENT PROGRAMS - OVERVIEW • RETURN ON INVESTMENT • Depending on current turnover and Recruitment, Training and Onboarding costs, we generally see the program pays for itself with 1 – 2% reduction in turnover.

14. A new benefit emerges RETURN ON INVESTMENT Real Results Data from Tuition IO: Available data ranges from 6 – 20 months based on time since launch and includes only employees eligible for the TIO benefits

15. A New Benefit Emerges A New Benefit Emerges e Student Loan Repayment Program Overview How Employer Contribution Helps Employee Pay off Debt

16. A NEW BENEFIT EMERGES • Financial Wellness Programs Provide Measurable Impact to Employee Engagement • Per BenefitEd survey in Nov 2016 study, 88% of participants said program shows that employer cares About their financial well-being. • 82% of participants surveyed in Nov 2016 BenefitEd survey said they would recommend employer to a friend because of the loan program • 18-24 yrs. old's ranked program value above medical and 401k 2nd only to PTO • 69.3% of borrowers would rather received a student loan payment instead of a gift this holiday season. • 1000 college grads were polled by SoFi, 90% were more willing to accept a job offer if the employer offered a student loan contribution benefit.

17. A New Benefit Emerges • Anticipated Growth • Per A Study By Willis Towers Watson, 4% of employers offered Student Loan Repayment Repayment Programs, Expect to increase to 25% by end of 2018. • Popularity of BENEFIT • 89% of job seekers believe student loan repayment should be an option in a benefits package. • 65% of employees currently participating in programs are millennials. • Millennial parents are the fastest growing segment. • Average ER contribution has shifted from $50/mo. to $100/mo.

18. A NEW BENEFIT EMERGES Competition Plan Differences

19. A New Benefit Emerges – Legal Aspects • Tax Cuts and Jobs Act slashed corporate rate from 35% to 21% is prompting many large employers to increase wages and look at other ways to invest in their employees • Tax Ramifications • Employers can deduct payments and fees like any other business expense • It is considered as taxable income to employee • DISCRIMINATION • Pending Legislation • HR795 • HR 2551

20. SAMPLE Companies Offering • US Bank • Fannie Mae and Freddie Mac • Fidelity Investments • HP • City of Memphis • International Paper • Ameritas • Midwest One Bank – Full time with 4 or more years of services receive $100 a month with a $10K lifetime cap. Under 4 years, get $75 a month. • Estee Lauder recently rolled out a $100 monthly contribution with a $10k cap.

21. Q & A